Here are five things you must know for Thursday, July 8:
1. -- Stock Futures Sink on Growth Worries
Stock futures fell sharply Thursday after the Federal Reserve discussed how and when it might reduce economic stimulus and as traders feared the possibility that the spread of new coronavirus infections could stall global growth.
Contracts linked to the Dow Jones Industrial Average dropped 492 points, S&P 500 futures fell 60 points and Nasdaq futures sank 208 points.
Stocks set record highs set Wednesday but turned lower Thursday amid worries about the economic recovery. The global death from COVID-19 passed 4 million on Wednesday, according to Johns Hopkins University, as the disease's delta variant has spread rapidly in countries with lagging vaccination rates. Sydney suffered its biggest jump in coronavirus infections this year as the delta variant spread in the Australian city.
The World Health Organization urged caution on worldwide reopenings.
The Federal Reserve's stimulus plans, meanwhile, remain front and center for investors. Minutes from the Federal Reserve's meeting in June showed the central bank discussed the appropriate time to begin pulling back on its support for the recovering U.S. economy.
“The Committee’s standard of ‘substantial further progress’ was generally seen as not having yet been met, though participants expected progress to continue,” according to minutes from the Federal Open Market Committee meeting on June 15-16.
“Various participants mentioned that they expected the conditions for beginning to reduce the pace of asset purchases to be met somewhat earlier than they had
anticipated at previous meetings.”
Minutes from the Federal Reserve's last meeting, which ended on June 16, showed that Chairman Jerome Powell and his colleagues felt that the benchmark of "substantial further progress" on job growth and inflation has not yet been reached, and therefore the central bank would likely continue the pace of its $120 billion in monthly bond purchases until the end of the year.
Investors were monitoring closely the release of the minutes from the central bank after the Fed caught markets off guard with its hawkish tilt last month.
"Much like the economic indicators that have rolled out over the past few months, the Fed seemed to echo the notion that the economic picture is not as clear as perhaps the market thinks," said Mike Loewengart, managing director of investment strategy at E*Trade. "But at the end of the day the minutes didn’t give us much new to chew on.
"(The Fed) already broadcasted a shorter runway to action than previously projected. So the bottom line is that the Fed will continue to watch the data and adjust accordingly. That said, with long-term yields falling, suggesting that growth may be stalled - the question remains if this is the canary in the coal mine for economic growth prospects.
The benchmark 10-year Treasury fell Thursday to 1.28%, around the lowest levels since February.
2. -- Thursday's Economic Calendar: Jobless Claims, Levi Strauss Earnings
The economic calendar in the U.S. Thursday includes weekly Jobless Claims at 8:30 a.m. ET and Oil Inventories for the week ended July 2 at 11 a.m.
3. -- Tesla Unveils Cheaper Model Y in China
The Standard Range Model Y starts at 276,000 yuan ($42,600) after government subsidies and incentives.
Tesla began taking orders for the vehicle on Thursday.
The SR Model Y is listed with a range of 525 km (326 miles) on the notoriously forgiving NEDC test cycle, according to Tesla Daily's Rob Maurer. Real-world range remains to be seen, but for context Tesla lists the range on the dual-motor Long Range Model Y at 594km (369 miles), Maurer noted.
“China has the world-leading new-energy market and is the first market outside the U.S. that Tesla owns a locally produced product,” Tesla said in a statement, Bloomberg reported. The company will “continue its investment in China and carry on its corporate mission of accelerating the world’s transition to sustainable energy and helping to boost the realization of a carbon-neutral target.”
The launch Thursday of the locally built Model Y in China comes after months of bad press for Tesla in the world’s biggest electric-car market, Bloomberg noted.
4. -- Shares of Newegg Fall After Mega-Rally
The stock has jumped 560% over the last six days.
One enthusiast posted on Reddit: “Been buying from newegg since 2004. Love the company, love the stock.”
TheStreet's Jim Cramer, in a tweet Wednesday, called Newegg a “total BGL game,” referring to when stocks are bagged, gunned and liquidated.
5. -- Google Is Sued by 36 States Over App Store Fees
Alphabet's Google (GOOGL) was sued by 36 states and the District of Columbia, focusing primarily on the control Google exerts on its app store.
The lawsuit alleges the company illegally abused its power over the sale and distribution of apps through the Google Play store so it could collect "extravagant" commissions of up to 30% on app purchases, the states said.
The 144-page complaint filed late Wednesday in a Northern California federal court represents the fourth major antitrust lawsuit filed against Google by government agencies across the U.S. since last October, according to the Associated Press.
“We don’t impose the same restrictions as other mobile operating systems do,” Wilson White, Google’s senior director of public policy, said in a blog post. “So it’s strange that a group of state attorneys general chose to file a lawsuit attacking a system that provides more openness and choice than others.”